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Hidden Harbor, with H.I.G. and Comvest pedigree, talks to LPs about debut fund

  • Firm talks about target up to $250 mln
  • Invests in lower middle market
  • First-time funds face bigger fundraising challenge

Hidden Harbor Capital Partners, formed by executives from H.I.G. Capital and Comvest Partners, is talking to potential limited partners about its debut fund that could target as much as $250 million, according to a person with knowledge of the firm.

It’s unclear whether Hidden Harbor has officially launched the fund or is pre-marketing to potential LPs. Spokeswoman Julia Bennett did not return a request for comment.

John Caple, formerly a partner at Comvest Partners, and David Block, formerly of H.I.G., launched the firm earlier this year. Caple earlier on was an investment professional at H.I.G., and Block most recently was president and chief executive of Swiss Watch International.

Hidden Harbor, Fort Lauderdale, Florida, is an operationally focused firm that invests in the lower middle market. The firm targets industries like industrials, transportation and logistics, business services, consumer and retail, a May statement from the firm says.

It looks for companies with annual revenue of $50 million to $500 million and EBITDA of as much as $25 million.

Tough row to hoe

Interestingly, Hidden Harbor does not look for companies being sold by other financial sponsors, its website said. “At Hidden Harbor, there is no funny business, broken commitments, hidden agendas or politics,” the website said.

Earlier this month, the firm hired former H.I.G. VP Brett Craig as a principal. Craig has worked with sectors like industrials, manufacturing and business services, Hidden Harbor said.

“While we are a first-time fund, we believe this foundation of core values and our noteworthy level of operating experience differentiates us in a meaningful way,” Caple said in the May statement.

First-time funds have had a tougher fundraising path since last year. Preqin found a total of 153 first-time private equity funds closed in 2015 on an aggregate amount of $16.7 billion. That’s the fewest first-time funds since before 2005, the first year Preqin started tracking first-timers.

Part of the issue is that LPs chose more established managers in an increasingly uncertain environment, sources told Buyouts last year. On top of this, many established managers were back in market last year, giving LPs an easy excuse to put their capital into re-ups, rather than untested first-timers.

Action Item: Hidden Harbor: http://www.hh-cp.com/

A sand artist paints the sand on Fort Lauderdale, Florida,  beach with the NCAA college football 2013 Discover BCS National Championship logo on Jan. 6, 2013. Photo courtesy Reuters/Mike Segar